21 February 2013

Developers' market outlook turned
pessimistic, following the introduction of the latest set of cooling measures
in January, with more expecting moderately lower residential prices in the near
term.

According to the Redas-NUS Real
Estate Sentiment Index (RESI), the Current Sentiment Index, where respondents
rate real estate market conditions now compared with six months ago, fell from
5.1 for 3Q 2012 to 4.6 for 4Q 2012.

The Future Sentiment Index, where
respondents rate overall property market conditions over the next six months
too slipped, from 4.7 in 3Q to 4.0 in 4Q. As such, the Composite Sentiment
Index fell from 4.9 to 4.3.

The prime residential sector showed
the sharpest decline in 4Q with a current net balance of -27 per cent and a
future net balance of -49 per cent, compared with -8 per cent and +2 per cent
the previous quarter. In the suburban residential sector, current net balance
was +10 per cent. Future net balance dropped significantly from +6 per cent in 3Q
to -28 per cent in 4Q.

Suburban retail and hotel/serviced
apartments were the two best performers with current and future net balances of
+14 per cent and +9 per cent respectively.

According to the survey, 48 per cent
of respondents expect moderately lower prices in the primary residential
market, up from 10 per cent. 25 per cent (a significant drop from 58 per cent
previously) expect prices to hold, and 28 per cent (from 33 per cent) expect a
moderate price increase.

Overall, respondents plan to launch
lesser units, with only 10 per cent indicating they will launch substantially
more units, from 23 per cent previously. 43 per cent (down from 48 per cent
previously) expect moderately more launches; 28 per cent (unchanged) expect the
launches to hold at the same level. Notably, 20 per cent expect lesser units of
new launches, compared with 4 per cent in 3Q.

Level of interest in land sales too
dropped, with only 10 per cent expressing moderately greater interest in GLS,
down from 32 per cent in 3Q. 38 per cent indicated moderately lesser interest,
a big jump from 7 per cent previously.

Interest in en-bloc sales was also
lacklustre - 35 per cent (compared with 61 per cent previously) expressed the
same level of interest; 45 per cent (up threefold from 15 per cent) anticipate
moderately less interest in en-bloc sales.

On the development cost front, labour
cost continues to be a major concern, indicated by 59 per cent of respondents,
from 55 per cent the previous quarter. One third of developers surveyed (33 per
cent) note their concern in land cost, whereas 25 per cent express concern on
building material cost.

A new record has been set for Housing
Board resale flats, with a 1,750 sq ft executive maisonette in Bishan changing
hands for $1.01 million last month. It broke the previous record of $1 million,
set by a 1,615 sq ft executive apartment in Queenstown last year.

Fresh data from the Singapore Real
Estate Exchange (SRX), which collects transaction information from larger
property firms, also revealed that such sky-high prices are not one-offs.

While only one resale flat transaction
breached the $900,000 mark in 2011, there were 18 last year. This year, even
before two months have gone, the number has already reached 18.

Property analysts said these flats,
mostly in established estates, are still value for money on a per sq ft (psf)
basis when compared to private homes.

They expect resale records to be
broken when choice units like those at the Pinnacle@Duxton hit the market in
the next two years.